10-QPeriod: Q2 FY2002

AMEREN CORP Quarterly Report for Q2 Ended Jun 30, 2002

Filed August 14, 2002For Securities:AEE

Summary

Ameren Corporation's (AEE) Q2 2002 10-Q filing shows a solid financial performance with net income increasing by 21% to $115 million, or $0.80 per share, compared to the prior year quarter. This growth was driven by favorable weather, increased emission credit sales, and the absence of a nuclear plant refueling outage. The company is navigating significant regulatory developments, including a recently approved settlement for its Missouri electric rate case, which will result in phased-in rate reductions and a rate moratorium through 2006. Ameren is also progressing with its planned $1.4 billion acquisition of CILCORP Inc., which is expected to be accretive to earnings. Despite a debt review by credit rating agencies, the company is focused on strategic investments and maintaining financial stability.

Key Highlights

  • 1Net income for the quarter increased 21% to $115 million ($0.80/share) compared to $95 million ($0.69/share) in Q2 2001.
  • 2Six-month net income was $174 million ($1.22/share), up from $153 million ($1.12/share) in the same period last year.
  • 3AmerenUE reached a stipulation and agreement in its Missouri electric rate case settlement, effective August 4, 2002, which includes rate reductions and a rate moratorium.
  • 4The company is proceeding with the acquisition of CILCORP Inc. for approximately $1.4 billion, expected to close by March 2003.
  • 5Capital expenditures in the first six months of 2002 totaled $411 million, primarily for infrastructure upgrades and new generation capacity.
  • 6The company reported $150 million in cash and cash equivalents as of June 30, 2002, an increase from $67 million at the end of 2001.
  • 7Ameren entered into new credit agreements totaling $400 million in revolving credit facilities to support commercial paper programs and general corporate purposes.

Frequently Asked Questions

The Missouri electric rate case settlement is estimated to reduce 2002 net earnings by $32 million, or 22 cents per share. This reduction is primarily due to rate reductions and the expensing of certain program obligations, partially offset by a reduction in depreciation expense. The company expects further earnings reductions in Q3 and Q4 2002 due to this settlement.

Ameren entered into an agreement to purchase CILCORP Inc. for approximately $1.4 billion. The transaction is subject to various regulatory approvals and is expected to close by March 2003. The acquisition is anticipated to be accretive to earnings per share in the first full year of operation.

Ameren utilizes derivative financial instruments, including forward contracts, futures, options, and swaps, to manage risks associated with changes in market prices for natural gas, fuel, electricity, and emission credits. The company actively manages its exposure to power price risk through its power risk management program and aims to reduce price risk through these hedging activities.

As of June 30, 2002, Ameren had $150 million in cash and cash equivalents, an increase from $67 million at the end of 2001. The company has access to significant borrowing capacity through its credit agreements and commercial paper programs, totaling $830 million at June 30, 2002, which was fully available. New credit facilities totaling $400 million were also entered into in July 2002.